in addition to a maximum increase of 15 cents per ton in the rates on bituminous coal from such mines to such destinations that was made effective November 15, 1937. Therefore, since November 14, 1937, the rail rates on coal from such mines to such destinations have been increased an aggregate maximum of $1.75 per ton. These prohibitive and continually increasing rail rates on coal have made it impossible for the Illinois mines to continue to market their coal at numerous important destinations throughout the Midwestern States in competition with natural gas transported in privately owned pipelines or with fuel oil transported in privately owned pipelines or in tank barges and tank lake vessels which are either privately owned or are exempt from regulation under section 303 (d) of the act, despite the fact that since 1945 the Illinois coal producers have made successive substantial reductions in the f. o. b. mine prices for their coal. In an effort to retain their remaining markets, and to partially escape the effect of the continuing upward spiral in the rail rates on coal, a number of the Illinois coal producers began the use of barge transportation for their products several years ago and the volume of coal tonnage transported by barge carriers, subject to the exemption under section 303 (b) of the act, has substantially increased in recent years. The development and growth of this barge transportation and coal tonnage has been possible in large part because of the accelerated trend of the expanding electric utility generating companies to locate their plants, particularly all new plants, on the navigable rivers or other inland waterways for the purpose of obtaining the benefit of the lower cost water transportation; to escape the high and steadily increasing rail rates on coal, and to keep the price they charge their millions of customers for electric energy on the lowest possible basis. Because their fuel costs represent the preponderant part of their total operating expenses, electric utility companies in the United States are constantly exploring ways and means to reduce their fuel costs as much as possible. According to the Federal Power Commission's official publication Steam Electric Plant Construction Costs and Annual Operating Production Expenses, Seventh Annual Supplement, 1954, the fuel costs of the electric generating plants in the United States, in 1954, ranged from 60 to 80 percent of their total operating expenses. The fuel costs incurred by any electric generating plant is of course primarily composed of the f. o. b. mine price for the coal they purchase and the transportation charges which they pay for moving such coal from the mine to their plant. The amount of transportation charges paid depends not only upon the distance which the coal must be transported from the mine to the electric utility plant involved but also upon the mode of transportation used. It is only the most favorably located plants, from the standpoint of close proximity to the coal mines or availability of very low cost water transportation, that can show a ratio of fuel costs to total operating expenses as low as 60 percent. The average ratio of fuel costs to total operating expenses for all electric generating plants in the United States was 74 percent in the year 1950, according to the Federal Power Commission publication Statistics of Electric Utilities in United States. This is the latest year for which I was able to get this figure. During the past 10 years, several electric utility companies have constructed a considerable number of new generating plants at various locations on the Mississippi, Minnesota; St. Croix, Ill.; Missouri, Ohio, and Tennessee Rivers for the primary purpose of being able to receive their coal via barge to reduce their fuel and electric generating costs so they may in turn charge the lowest possible rate for the electric energy which they sell to the millions of consumers located in the many States which they serve. The rail rates on coal from the Illinois mines to these electric-utility plants, in virtually every case, far exceed the f. o. b. mine price of the coal. These electric-utility plants have invested millions of dollars in the plants which they have located on these navigable waterways and in the facilities which they have constructed for the receipt, storage, and handling of the coal which they receive by barge. During the period that they have been in operation and have been receiving coal by water carriers exempt from regulation under section 303 (b) of the act, they have come to depend upon the stability of the rates charged by such carriers. We believe it can be safely said that none of the advocates of the repeal of the exemption from regulation for the water carriers presently contained in section 303 (b) of the act and the subjection of such water carriers to regulation by the Commission has promised or said this would result in any reduction in the rates or charges, of these water carriers, on bituminous coal or on any other commodity which they transport. On the contrary, the expectation of these parties, as we understand it, is that elimination of this exemption and regulation by the Commission of these water carriers will result in action by the Commission to require increases in the present rates of such water carriers, in order to bring them up nearer to the level of the pesent high rail rates, for the benefit and protection of the railroads. Elimination of this exemption for water carriers of bulk commodities and action by the Commission requiring increases in the present rates of such water carriers on bituminous coal to a high level more nearly approaching that presently maintained by the railroads would immediately result in the diversion and loss of substantial tonnages of Illinois coal now moving via barge to numerous utility plants located on the Mississippi River and other inland waterways to natural gas or oil. This in turn would immediately result in an increase in the fuel costs of such electric utility plants and a depreciation of their large investments in the facilities they have constructed for the receipt, storage, and handling of coal received by barge, and unquestionably in an increase in the rates they now charge for the electric energy that they generate and sell to the millions of citizens which they serve. The substitution of natural gas or fuel oil for the bituminous coal now moving by barge from the Illinois mines to these utility plants would not benefit the railroads serving such mines or increase their revenues in any way because they obviously do not, or would not, participate in any way in the transportation of the natural gas or fuel oil. On the contrary, these railroads would be injured and their revenues would be reduced if the present coal tonnages moving by barge from such mines to these utility plants were displaced by natural gas or fuel oil. This is true because such railroads now enjoy a haul, and the revenue thereon, from the Illinois mines to the river ports, such as Alton, Ford, or South Liverpool, Ill., on virtually all of the Illinois coal which moves by barge from such river ports to electric utility plants on the Illinois, Mississippi, Minnesota, and St. Croix Rivers, which they would lose if such plants substituted natural gas or fuel oil for the coal which they are now using and receiving via such railbarge routes. It is our understanding that the various provisions of H. R. 6141, including the provision recommending repeal of the present exemption contained in section 303 (b) of the Interstate Commerce Act, are based upon the report of April 18, 1955, of the Presidential Advisory Committee on Transport Policy and Organization. The recommendations contained in that report seem to be quite conflicting. For example, the report recommends, in its proposed declaration of the national transportation policy, that "economic regulation of transportation be reduced to a minimum consistent with public interest and assure fair and im partial economic regulation." It further recommends that, in order to put this national transportaiton policy into effect and to provide that it will be carried out, many of the present provisions of the Interstate Commerce Act, giving the Interstate Commerce Commission authority to regulate the railroads, including their rates, be repealed and eliminated. This is the same committee and the same report, however, which recommends the repeal of section 303 (b) of the act so that water carriers now exempt from regulation under this provision of the act will be subject to full regulation by the Commission, including regula tion which could result in substantial increases in the present rates of such water carriers to the point where they would be unable to continue their operations because of the loss of their traffic. The policy of this committee and of Congress should, we believe, be directed toward the objective of giving the ultimate consumer the benefit of the lowest possible transportation costs. This objective would be largely vitiated and made impossible of attainment if the proposal contained in section 14 of H. R. 6141 were approved by Congress and enacted into law. We therefore must earnestly urge this committee and Congress to disapprove such proposal in its entirety. Mr. HARRIS. This concludes the hearings on a most important and highly controversial problem. The Secretary of Commerce and the Interstate Commerce Commission were to return tomorrow. Due to the fact that the Secretary has a long-standing engagement for tomorrow and will be out of the city, and certain members of the Interstate Commerce Commission find it most inconvenient to be here tomorrow, particularly the chairman who is also out of the city, we have postponed the date for their appearance until Wednesday of next week, the 20th. The committee, then, will adjourn on this subject until 10 o'clock on Wednesday of next week. I might indicate now that at the conclusion of the session on next Wednesday we will keep the record open for a period of 1 week for anyone who desires to supplement their statements or to file additional statements so that they may be included. Speaking for myself, I am quite pleased over the record that has been made on this subject. We were discussing these hearings a moment ago which appear to have been rather lengthly and drawn out. There is no question but what we have made, now, the best record, I think, on the subject, that has been made in a long time; perhaps the most outstanding record that has ever been made on the overall subject. The committee will adjourn. (Whereupon, at 11:55 a. m., the hearing was adjourned until 10 a. m., Wednesday, June 20, 1956.) TRANSPORTATION POLICY WEDNESDAY, JUNE 20, 1956 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS, Washington, D. C. The subcommittee met at 10 a. m., pursuant to recess, in room 1334, New House Office Building, Hon. Oren Harris (chairman of the subcommittee) presiding. Mr. HARRIS. Let the committee come to order, please. When the committee adjourned last Thursday, we announced that we would meet today by prearrangement with the Secretary of Commerce for the purpose of permitting the Secretary and his associates to return, as was requested at the outset of these hearings in April, for further comments. We are glad to have Mr. Weeks, the Secretary, back with us, Mr. Rothschild, Mr. Ray, and others who are here with him and who appeared with him at the outset of these hearings. It will be noted, of course, that we have had rather lengthy and thorough hearings on the entire subject. There are many highly important and difficult problems involved. There are many important issues to a sound transportation policy which this committee must consider, and of course we are seeking the advice, help, and information from all sources in order that we can take the best action, in the interest of the general public in furtherance of a sound transportation policy for the United States. Mr. Weeks, we have heard many witnesses since you were here. We have had much testimony presented, and developed a rather voluminous record. I doubt very seriously if you have had an opportunity to digest or even analyze all of the information that has been presented, but I am sure the major points of discussion have been called to your attention and, therefore, we are glad to have you back with us this morning. STATEMENT OF HON. SINCLAIR WEEKS, SECRETARY OF COMMERCE; ACCOMPANIED BY LOUIS S. ROTHSCHILD, UNDER SECRETARY FOR TRANSPORTATION, AND PHILIP A. RAY, GENERAL COUNSEL, DEPARTMENT OF COMMERCE Secretary WEEKS. Thank you, Mr. Chairman. May I say that we do know very well the time and effort that the committee has put into these hearings. May I make this comment: You were referring to an opportunity to keep caught up with the daily testimony. We have attempted to follow the testimony with 1725 |